They say knowledge is power and I absolutely agree. The best example I can think of lately is the annual JD Power automotive summit which always precedes the NADA convention.
This year was the same and a little different.
What was the same? The best and brightest in the industry showed up in droves to see and explain what automotive can expect in the coming months.
What was the difference? The market outlook offered a lot of insight but also a bit of caution as we all look ahead to how to win in 2024 and beyond.
Let’s cut to the chase –
Things are going to be a little more challenging in the coming year than in the past, that is certain. The retail automotive industry is rolling off an eighteen-month period of unprecedented prosperity and profitability, and those that prepared for the market to correct or return to a balance will be rewarded.
Prioritize the Customer Experience
The people at JD Power presented interesting data points and included not only year-over-year data but also performance and projections offered in comparison to 2019, the last real “normal” period in the business. This matters because in 2019, things were competitive, perhaps too much so. Because of this, an interesting trend began, the retail network and the manufacturers started leaning into customer experience like never before. Dealerships and manufacturers were taking the time to listen to and respond to consumer expectations and adjusting processes to accommodate them. The result was the adoption of alternative retail formats and, more importantly, the knowledge that a dealership and a brand would win by offering a premium guest experience.
Through the pandemic and the supply shortage that followed, many of the good habits ended up slipping, driven by attrition (many of the talented sales and managers jumped to different industry or retired altogether) and the inevitable lack of motivation caused by a seller’s market. These trends played out in the presentations with the word TALENT being mentioned several times.
The presentations highlighted the widening gap between available inventory and available buyers. At the end of 2023, the available inventory of new vehicles was 1.6 million vehicles. The expected production for 2024 is 16.6 million with the expected seasonally adjusted annualized rate (SAAR) being projected to be 15.5-16 million. It doesn’t take a math whiz to figure out that the result will be an increase in incentive spending (JD Power projects that incentives will rise to levels similar to those of 2019 in the coming year), a focus on customer experience and the need for smart, targeted, and effective advertising. You can also add employee development to this short list as well with many staff members not understanding the importance of customer-centric selling or the value of optimizing customer experience.
The message was loud and clear: you can win in 2024 but you must sharpen your game to do so. Being the lowest bidder will not be enough and finding buyers will be more challenging than it has been in a while.
Marchex is Here to Help
Companies that measure and quantify the guest experience will have a lot of work to do and Marchex is ready with real-time insight into the customer experience. Our team has spent the effort to build models that not only measure the customer experience with callers, but also connects these experiences with outcomes to guide dealership efforts and help them win.
Did you ever wonder why one conversation can lead to a successful outcome and another does not? Employee development and coaching has always been about so what and now what, highlighting practice (good or bad) and then providing the insight to allow dealerships and associated team members to act. The team at Marchex provides useful signals along with correlated outcomes to drive coaching, which is a definite need as we move forward in 2024.
When we mention the effectiveness of advertising, it is important to note that advertising works when a campaign drives traffic to dealerships, with a good portion of traffic coming from phone calls. Marchex offers insight into marketing performance empowering dealerships and brands to make informed decisions with views into what advertising is driving traffic and what is not.
The trip to Las Vegas was worth it, and the JD Power event was the highlight for me. I encourage anyone in the industry to attend–you learn more in a day than you could in months.
